There's money in social media after all.
According to Gartner's forecast, those social networking and microblogging that take up people's time have a dollar value attached to them. How much? Almost US$17 billion by the end of the year. That is a 43.1 percent increase from 2011 revenues of U$11.8 billion, mainly due to ads, Gartner added.
Ads are expected to bring in U$8.8 billion this year, while social gaming will bring in U$6.2 billion, more than double the revenues raised between 2010 and 2011. Revenues from subscription are expected to total U$278 million this year.
The popularity of social media is increasing in recent years, noted Gartner, but it is still a challenge to translate this popularity to dollar terms.
"Usage of online social media has matured, and more than one billion people worldwide will use social networks this year," said Neha Gupta, senior research analyst, Gartner. "Although the number of social media users is large, and in some cases increasingly mature in their usage patterns, the market is still in its early stages from a revenue perspective."
Gartner is expecting the number of social media users to increase moderately. Already, social media companies have been devising ways to keep users glued and to attract new users. New forms of media have recently been developed as a result of tough competition among social media players, while incorporating entertainment on the social sites is another way to retain and attract users.
Even marketers are optimistic of the potential of social media by allocating a large percentage of their advertising budget to social media. Because social media sites have a pool of engaged users, marketers are encouraged that this would increase the potential "click-through rates" (CTRs). Through the networks of contacts of these users, marketers can produce targeted ads.
"Social media sites are becoming more innovative in their ad products to attract marketers," Gupta said. "Social networking sites should deploy data analytic technologies that interrogate social networks to give marketers a more accurate picture of trends in accordance with consumers' needs and preferences."
Despite the pull of ads in bringing in revenues, social media sites are coming up with more creative ways to generate revenues from the traffic. Some strategies developed include new forms of media and entertainment.
More users are expected to pay to be able to join social networks, or the subscription model, but the cost of the subscription itself is expected to be lower because of the preference for ad-based revenue models, said Gartner. The market analyst firm does not expect the premium subscription model -- with LinkedIn and Xing as examples -- to succeed. Gartner has noted a decline in the ratio of subscription revenues from these two professional networking sites.
A promising prospect is in the sale of virtual goods in social gaming. Examples would be to pay for digital content or applications, such as FarmVille, or to make person-to-person (P2P) payment to another user in the network site. New revenue opportunities for social media will also arise as both mobile and TV platforms integrate with social networking as a core service, Gartner added.
"New revenue opportunities will exist in social media, but no new services will be able to bring significant fresh revenue to social media by 2016," said Gupta. "The biggest impact of growth in social media is on the advertisers. In the short and medium terms, social media sites should deploy data analytic techniques that interrogate social networks to give marketers a more accurate picture of trends about consumers' needs and preferences on a customised basis. In the meantime, however, they should also continue to exploit other channels of revenue like mobile advertising and social commerce."